Our senior associate Dr. Mari Agarmaa, head of our Estonian insolvency and restructuring workstream, was appointed as an Estonian Bankruptcy law expert in the landmark Irish court proceedings regarding the bankruptcy proceedings of Estonian entrepreneur Oliver Kruuda.
EU cross-border insolvency regulation in focus
Mr. Kruuda’s bankruptcy was declared in 2021 by both Estonian and Irish courts, following his relocation to Ireland in 2020. The Irish court was tasked with analyzing whether the proceedings should be held in Ireland or Estonia. In total, Kruuda has debts of over EUR 47 million.
On 27 June, the Irish court annulled Kruuda’s bankruptcy order, despite the fact that his bankruptcy was declared in Ireland before his bankruptcy was declared in Estonia. The decisive factor was the fact that before the declaration of bankruptcy in Ireland, a temporary trustee had already been appointed in Estonia, which means that insolvency proceedings were initiated in Estonia earlier within the meaning of the EU Cross-Border Insolvency Regulation.
This is a precedent-setting case in both Estonian and international case law. The situation is unique as proceedings were taking place in Estonia and Ireland at the same time, and Estonian courts found that an earlier bankruptcy order rendered in Ireland does not impede the conducting of Oliver Kruuda’s bankruptcy proceedings in Estonia. Now, the Irish court ruled that an Irish bankruptcy order should be set aside because of the proceedings in Estonia.
The issue is further important in light of the protection of creditors’ rights, helping to determine whether the debtor is using “forum shopping” for getting the bankruptcy proceedings opened in a more favorable legal system in order to avoid responsibility.
Our client team
Our senior associate Dr. Mari Agarmaa, one of the most eminent experts and practitioners of Estonian insolvency law, was involved by TGS Baltic, representing creditor Best Idea.
Mari analyzed whether the appointment of a temporary trustee and the application of the prohibition on disposal in Estonia is the opening of insolvency proceedings within the meaning of the EU Insolvency Regulation and whether, consequently, Oliver Kruuda’s bankruptcy jurisdiction falls within Estonia and not Ireland.
The Irish court took the same view as Mari expressed in her expert opinion, according to which the bankruptcy case of Oliver Kruuda is subject to the Estonian court and annulling the Irish bankruptcy regulation.
More information (in Estonian) – Postimees.